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Why remote work has staying power

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Remote work, a trend that sprang to prominence during the Covid-19 pandemic, appears to be an entrenched fixture of the U.S. labor market, according to economists.

The work-from-home revolution is “one of the major shifts in the U.S. labor market in the last couple decades,” said Nick Bunker, economic research director for North America at job site Indeed.

“It’s still kicking,” he said. “It’ll probably be around for a long time.”

The remote work label includes workers who do their jobs from home full time and so-called “hybrid” arrangements, whereby businesses might ask employees to work a few days of the workweek from the office and the rest from home.

Travel demand remains really strong and remote work is adding to it, says Bernstein's David Vernon

Such arrangements were rare before the pandemic, economists said.

However, they became prolific amid stay-at-home orders during the early days of the pandemic.

While remote work opportunities have waned from their peak, they appear to have stabilized well above their pre-pandemic levels, economists said.

The number of days worked from home during the workweek has held steady since early 2023 at between 25% and 30%, more than triple the pre-Covid rate, according to WFH Research data as of July.  

The share of online job listings that advertise for remote or hybrid work also appears to have leveled off at just below 8%, about three times higher than in 2019, according to Indeed data as of June 30.

“Remote work is not going away,” Nick Bloom, an economics professor at Stanford University who studies workplace management practices, recently told CNBC.

Why remote work has endured

Remote work has endured largely because it benefits both workers and employers, economists said.

For example, Bloom’s research suggests workers value hybrid work about as much as they would an 8% raise.

“It matters a lot, to a lot of job seekers,” making it difficult for employers to “wrench away” that aspect of work, Bunker said.

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Remote work is also a profitable arrangement for businesses, economists said.

For example, they might save money on real estate by downsizing their office space. Remote work also opens up the pool of potential candidates during hiring, Bunker said.

Workers who can work remotely also tend to quit less frequently because they value the arrangement, thereby reducing company outlays on hiring, recruitment and training, Bloom said.

Of course, not all jobs can be done from home. About 36% of employees with jobs that could be done remotely were instead working in the office full time as of July, according to WFH Research.

Companies have pointed to downsides of remote work, including a reduced ability to observe and monitor employees and reduced peer mentoring, cited by 45% and 42% of employers, respectively, according to a 2023 ZipRecruiter survey.

An economic downturn could potentially trigger employers to pull back on remote work, to the extent workers lose leverage, Bunker said.

However, he questions whether many would do so, given the aforementioned financial benefits of remote work. Additionally, such a move would likely reduce morale and worker productivity during a period of already-low morale, he added.  

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Here’s how to know if active ETFs are right for your portfolio

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Exchange-traded funds are generally known for passive strategies. But there has been a surge in actively managed ETFs as investors seek lower costs and more precision, experts say.

Active ETFs represented just more than 2% of the U.S. ETF market at the beginning of 2019. But these funds have since grown more than 20% each year, rising to a market share of more than 7% in 2024, according to Morningstar.

Some 328 active ETFs have launched in 2024 through September, compared to 352 in 2023, which has been “kind of remarkable,” said Stephen Welch, a senior manager research analyst for Morningstar, referring to the growth of ETFs this year.

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Here’s a look at other stories offering insight on ETFs for investors.

There are a few reasons for the active ETF growth, experts say.

In 2019, the U.S. Securities and Exchange Commission issued the “ETF rule,” which “streamlined the approval process” and made it easier for portfolio managers to create new ETFs, Welch said.

Meanwhile, investors and advisors have increasingly shifted toward lower-cost funds. Plus, there has been a trend of mutual fund providers converting funds to ETFs.

Still, only a fraction of issuers have been successful in the active ETF market. The top 10 issuers controlled 74% of assets, as of March 31, according to Morningstar. As of October, only 40% of active stock ETFs had more than $100 million in assets.

The “biggest thing” to focus on is the health of an active ETF, explained Welch, warning investors to “stay away from ones that don’t have a lot of assets.”

Active ETFs allow ‘tactical adjustments’

While passive ETFs replicate an index, such as the S&P 500, active managers aim to outperform a specific benchmark. Like passive ETFs, the active version is typically more tax-friendly that similar mutual funds.

“Active ETFs allow managers to make tactical adjustments, which may help navigate market volatility more smoothly than a passive index,” said certified financial planner Jon Ulin, managing principal of Ulin & Co. Wealth Management in Boca Raton, Florida.

These funds can also provide “more unique strategies” compared to the traditional index space, he said.  

The average active ETF fee is 0.65%, which is 36% cheaper than the average mutual fund, according to a Morningstar report released in April. But the asset-weighted average expense ratio for passive funds was 0.11% in 2023.

However, there is the potential for underperformance, as many active managers fail to beat their benchmarks, Ulin said. Plus, some active ETFs are newer, with less performance data to review their performance.

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Ahead of U.S. election, financial advisors say public debt is top concern

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Voters work on their ballot at a polling station at the Elena Bozeman Government Center in Arlington, Virginia, on September 20, 2024.

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Many investors worry about how the outcome of the presidential election will impact their investments.

But there’s another risk financial advisors are focused on — public debt, according to a new survey from Natixis Investment Managers.

Most U.S. advisors — 68% — rank public debt as the top economic risk, while 64% of advisors worldwide said the same, according to the survey of 2,700 respondents in 20 countries, including 300 in the U.S.

“No matter who wins the election, they’re convinced public debt is going to continue to go up,” said Dave Goodsell, executive director of the Natixis Center for Investor Insight.

The term public debt is used interchangeably by the U.S. Treasury with national debt and federal debt.

The government has borrowed to pay expenses over time, comparable to how an individual might use a credit card and not pay off the full balance each month. The U.S. national debt is now more than $35 trillion and growing.

The next U.S. president and Congress will inherit that government spending dilemma, as well as looming trust fund depletion dates for Social Security and Medicare.

More individuals now believe they are on their own when it comes to funding their retirements, the Natixis survey have shown, according to Goodsell.

Experts say there are certain moves individual investors can make to limit the financial exposure they have to those broader risks.

“You cannot control what Congress is doing, but you can control how you plan, how you save, invest and react to the news,” said Marguerita Cheng, a certified financial planner and CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland. Cheng is also a member of the CNBC FA Council.

Diversify your portfolio

50% of Americans believe election outcome will directly impact their personal finances, survey finds

Adjust your tax exposure

Higher national debt means taxes may also likely go up.

“We can’t forecast what tax rates will be in the future,” Cheng said.

Having money in a mix of tax-deferred, tax free and taxable accounts can be helpful, because it gives investors flexibility to limit their taxable withdrawals.

Roth individual retirement accounts and 401(k) plans allow savers invest post-tax money toward retirement. Taking advantage of other kinds of accounts — 529 college savings plans or health savings accounts for medical expenses — may provide tax advantages for money spent on qualified expenses.

Pare back personal debts

While the U.S. national debt is high, consumer debts have also been climbing.

“The sheer amount of debt that is outstanding that is charging more than 10% per year is shocking,” Glassman said.

To help keep those balances in check, and how much they cost, it helps to have good credit, Cheng said.

Consumers can help reduce the cost of their debts by paying their bills on time, which then lets them borrow money at better interest rates on everything from cars to homes, and can even help to reduce car insurance costs, she said.

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Why parents will pay $500,000 for Ivy League admissions consulting

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Ivy League architecture at Princeton University.

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At the nation’s top schools, including many in the Ivy League, acceptance rates hover near all-time lows.

“College admissions only ever gets more competitive and there’s a lot of stress from families about the stakes and how to get in,” said Thomas Howell, the founder of Forum Education, a New-York based tutoring company.

For some families, getting their child into a top school is an investment, and to that end there is almost no limit to what they will spend on tutors, college counselors and test prep.

‘Top 20% or bust’

Meanwhile, as the sticker price at some private colleges nears six figures a year, some students have opted for less expensive public schools or alternatives to a degree altogether. For those willing to pay for a four-year, private college, it should be worthwhile, the sentiment often goes.

“The value proposition of higher education is splitting,” Howell said, “it’s either a top school or a real value.”

For this crop of college applicants, it’s “top 20% or bust,” he added.

As a result, universities in the so-called “Ivy Plus” are experiencing a record-breaking increase in applications, according to a report by the Common Application.

The “Ivy Plus” is a group that generally includes the eight private colleges that comprise the Ivy League — Brown, Columbia, Cornell, Dartmouth, Harvard, University of Pennsylvania, Princeton and Yale — plus the University of Chicago, Duke, Massachusetts Institute of Technology and Stanford.

To get into this elite group of schools, many families look for outside help to get a leg up.

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“The consensus is it’s only worth going to college if it’s a life changing college,” said Hafeez Lakhani, founder and president of Lakhani Coaching in New York. 

“What hasn’t changed is people with enormous resources willing to invest over $100,000, which is about 20% of our clients,” Lakhani said. “This might be the single largest thing they’ve spent on other than a car.”

Lakhani Coaching’s clients spend an average of $58,000 on counseling, but some have spent as much as $800,000 over the course of several years, according to Lakhani.

At that price point, students receive “essentially a ‘SEAL-team’ level tutor through almost every class,” he said. Lakhani was equating the academic support with the highest level of organization and execution that epitomizes the training of a Navy Seal, the special operation force that stands for sea, air and land teams.

Lakhani charges $1,600 an hour for his services, the top rate at his company, and still, families often choose to work with him over the less senior coaches there, some of whom charge about $290 an hour, he said.

Even if he charged more, that dynamic likely would not change, he added.

Parents often say, “it’s worth the investment,” he added. “That word investment comes up over and over again.”

Christopher Rim, founder and CEO of college consulting firm Command Education.

Courtesy: Christopher Rim

At Command Education in New York, counselors meet with students weekly starting in eight or ninth grade. Families are charged $120,000 per year, not including the Standards Admission Test (SAT) or American College Test (ACT) test prep. By graduation, they’ve spent roughly half a million dollars.

Command caps the clientele at 200 students worldwide, mostly on a first-come, first-served basis, although they will turn students away if they don’t think they can deliver the desired outcome, according to Christopher Rim, the founder and CEO.

“At the end of the day, results are most important,” he said.

‘This is not a neighborhood tutor’

‘An imperfect meritocracy’

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“Higher education is an imperfect meritocracy,” Lakhani said.

However, the wealthiest students hailing form the country’s top private schools are primarily competing amongst themselves as schools look to build a diversified class.

“When you are applying from an affluent family, the people you are competing against are people in a similar bucket,” Lakhani said.

The irony is most don’t want to admit that they’ve received private help, even if they are fortunate enough to get it.

“Every parent wants to say their child does it on their own,” Rim said.

Is an Ivy League degree worth it?

A study by Harvard University-based non-partisan, non-profit research group Opportunity Insights compared the estimated future income of waitlisted students who ultimately attended Ivy League schools with those who went to public universities instead.

In the end, the group of Harvard University- and Brown University-based economists found that attending an Ivy League college has a “statistically insignificant impact” on earnings.

However, there are other advantages beyond income.

For instance, attending a college in the “Ivy-plus” category rather than a highly selective public institution nearly doubles the chances of attending an elite graduate school and triples the chances of working at a prestigious firm, according to Opportunity Insights.

Leadership positions are disproportionately held by graduates of a few highly selective private colleges, the Opportunity Insights report found. 

Further, it increases students’ chances of ultimately reaching the top 1% of the earnings distribution by 60%.

“Highly selective private colleges serve as gateways to the upper echelons of society,” the researchers said.

“Because these colleges currently admit students from high-income families at substantially higher rates than students from lower-income families with comparable academic credentials, they perpetuate privilege,” they added.

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